Aim for Stable Growth and Improving EBITDA margin
Developing Business through Local Brands Mainly in North America, Europe and Australia
Since 2010, in overseas operations, we have been operating mainly in North America, Europe and Australia by acquiring overseas staffing companies maintaining their brand names rooted in the local area.
These operations consist of The CSI Companies, Staffmark, Advantage Resourcing and Attèrro in North America; USG People and Advantage Resourcing in Europe and Peoplebank and Chandler Macleod in Australia.
Business models for staffing are to a large extent similar around the world. Given the similarity of global staffing models, our overseas subsidiaries have adopted our Unit management system. This proven management system helps them optimize their own management and sets them on a path toward even greater EBITDA margins.
Improved EBITDA margins have been noted at companies in North America, Europe and Australia, where Unit management system has had time to take effect. We have made steady progress in profitability at Recruit Global Staffing B.V.（former USG People B.V.） , which was made into a subsidiary in FY2016.
Market Environment (FY2017)
The Size of the Global Staffing Market Is Approximately 40 Trillion Yen
The world staffing market is worth about 40 trillion yen, of which matured economies account for more than 70%. Similar to Japan, overseas staffing markets reflect the development of the macro economy, or GDP growth.
In Europe and Australia, the staffing markets have been solid. Market conditions have been rebounding moderately in European countries, including the four countries where USG People has its operations (the Netherlands, Belgium, France and Germany). In Australia, the recovery has not picked up speed yet, but we expect economic growth to accelerate through 2018 owing to signs that stagnant conditions in the mining industry will end as natural resource prices bottom out.
In the global market, the staffing service penetration rate recorded an average of 1.7%. In areas where we mainly operate our businesses outside our home market, the rate in the US was 2.2%, Europe 1.9% and Australia 3.7%.
Improving Unit Management System to increase EBITDA
We use M&A to expand overseas operations, introducing and refining Unit Management System to improve EBITDA margins.
In FY2017, the staffing markets in North America, Europe and Australia, where we mainly operate our businesses, continued its moderate expansion trend. Revenue of our operating companies grew favorably, also reflecting the full-year contribution of USG People which was acquired in June 2016. As a result, revenue was 789.5 billion yen, up 11.6% year on year. EBITDA increased 7.4% year on year in FY2017. The growth rate of EBITDA was somewhat lower than the revenue growth mainly due to mix effects.
* Six months under JGAAP, but ten months under IFRS
Strategy Going Forward
Efficient Operation of Subsidiaries and Business Base Expansion
Looking ahead, we plan to move unit management in our operating companies forward into a next stage in which continuous improvement goes hand in hand with profitable revenue growth. When we acquire a company, its operations are left to local management, who have the best knowledge of local business conditions. We dispatch our own personnel including executives and staff to key positions in charge of implementing and improving Unit Management System.
Global Staffing Markets [Billions of Euro]
Source: Ciett Economic Report 2017
Penetration Rate of Staffing Services [%]
Source: Ciett Economic Report 2016
*1. The above ranking does not include China due to the lack of statistical data
Annual Revenue [Billions of Yen]
* under Japanese GAAP